Closing Bell - Closing Bell: Reset and Recharge? 3/26/24

Episode Date: March 26, 2024

How much steam is left in the record-setting rally? Sofi’s Liz Young and Payne Capital’s Courtney Garcia map out their forecasts. Plus, JP Morgan’s Jason Hunter says the rally broadening is “suspicious” and that now is the time to sell the break down in crowded momentum groups. And, Gamestop reporting after the bell. We tell you what’s at stake for that stock and what to watch in the report. 

And welcome to Closing Bell. I'm Scott Wabner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the rally's momentum. Whether it is fading or just resting and recharging, we will ask our experts over this final stretch. In the meantime, your scorecard with 60 minutes to go in regulation looks like that. We're mostly positive across the board, modestly so as this quarter winds down. That PCE report on Friday looming large, even with the markets closed that day. Interest rates, well, they're mostly lower ahead of that. We'll keep an eye there.

Two years a little bit higher. There's the year of 459. Discretionary, comm services, the banks leading the way today in the session. Tesla's up nicely as well, even though it remains one of the S&P's worst performers this quarter. And UPS having a day, well, its worst day since January as the company reveals its new financial targets. All of it takes us to our talk of the tape, how much steam is left in this record-setting rally. Let's ask Liz Young, SoFi's head of investment strategy, with me here at Post9. Welcome back. It's good to see you. Thank you. You think momentum's fading? I do think it's fading. Is

that how you would answer that question at the top? Well, I mean, you can look at it even just in a numerical sense. If you look at factor returns and what's happened and break this rally up into pieces, the first piece of it being October to December, momentum led, high beta led. And then you get into 2024. Momentum was still leading, but sort of slowing down. And you saw low volatility come in as a leader. You saw some quality come in as a leader. And then in March in particular, you have low vol quality value dividends as the factors that are leading.

The one consistent factor that had been leading the entire time and continues to is large cap versus small cap. OK, let's distinguish here because we could take this one of two ways. When we talk about momentum, you were speaking specifically about the momentum trade, momentum stocks like big cap tech and otherwise. I'm more talking about momentum of the rally itself. Do you think we're still cool? Are we fading in that regard to the momentum behind the rally? I think the velocity of it is fading, the speed of it, the fervor of it. But I don't think that the rally is ready to conk out. I think that there's still room for stocks to continue this rotation trade. The risk that's presented in the near term is

the rebalance that could happen at the end of the first quarter. You've got the S&P up almost 10% year to date, aggregate bonds down 1%. That's a really big spread, relatively speaking. So you might see some of that narrow as the quarter ends. But I still think that there's more room for a rally to continue, just not at the same speed. I mean, the dreaded April 15th looming, too, right? Tax day. I've heard terrible things. I've heard people talk about, you know, that could be ineptest that you could see some selling in the market. Pay your tax bill. Yeah. Yeah. I think that happens every year, though. I don't know that that's going to be something that really pushes us one direction or another.

Well, after a big rally, though, right? After a big rally. That's the context. If people took their gains last year, I don't know that there were a ton of people doing that. I think everybody rode it quite a bit. And then we got new money that came in and continue to invest in equities. And maybe some of that rotation that's happened this year that's driven more of the rally into other sectors is people taking gains out of tech. But I think people are trying to avoid taking those big gains. You're getting into a seasonally good period. I mean, April is good, traditionally, according to Ryan Dietrich

of CMT, Pat Amon. I like what he puts out. Second best month since 1950, third best over the past 20 years, fourth best over the past 10, fourth best in an election year. So seasonally, you know, you're set up to potentially continue this, and then you obviously have the Fed and these possible cuts starting this summer looming. Right. Well, I happen to think the Fed is going to be a lot more patient than we originally thought, obviously, but even more so than we think right now. I think that they are going to move much more slowly and perhaps even more slowly than most other major central banks. And that means that maybe they do start when we expect, but then they keep it on pause from that point.

And the whole thing is a very, very slow moving bowling ball through molasses as they start that cutting cycle. Markets do tend to do pretty well after that last hike and before the first cut. This happens to be a very long period in between that last hike and the first cut. If the Fed makes it to November, it'll be the longest one ever. And it's just going to be this waiting game. So we're waiting for news, waiting for reasons to continue to stay optimistic. And so far, we're getting them. So did you see what Morgan Stanley's former chairman and CEO, James Gorman, said on this very network earlier today? Because I'd like to read it to you and then get you to respond to it. It's related to the Fed, how many cuts we may get, if any. He says, I wouldn't be surprised if they move in the first half of this year. I wouldn't be totally shocked if they don't do

anything. He said, I would be surprised if they move in the first half of this year. I would not be totally shocked if they don't do anything for He said, I would be surprised if they move in the first half of this year. I would not be totally shocked if they don't do anything for the rest of the year. What happens if he's right? What happens if they don't do anything for the whole year? I mean, that's the definition of higher for longer. And I think, frankly, it would help their credibility on the inflation fight because them themselves, the projection that they have is that they're not at 2% by the end of the year.

And if the data continues to come in this strong and the labor market holds up, that's them staying true to their word. There's really no reason to cut. And if the economy can withstand it, that's OK. I think that they will start cutting this year. I think he's right about the first half. I'll be surprised if they start in the first half at this point. I don't think that we I don't think that we're necessarily headed for three cuts, but I do think they'll start this year. I mean, June counts as the first half, technically speaking. So maybe if you get the first one in June

and then they sort of see how things unfold. If you get one, you think that's okay? Is it decent enough? I mean, as long as... See, I've heard people make the argument it doesn't even matter. As long as we know that the next move is a cut, it doesn't necessarily matter when it comes. It's the fact that this regime of hiking the way they did so strongly and so swiftly is over.

We know it's over. And that's why the market's been rallying. That I would agree with that. However, they were late on the hiking cycle. They're probably going to be late on the cutting cycle. But that's because the data is delayed. They almost have to be late. They want to have confirmation that's because the data is delayed. They almost have to be late. They want to have confirmation of certain things before they feel comfortable starting to

cut. So it's going to look like they're late. But the economy is good, too, right? It gives them a little cushion. Right. Well, and I would also agree. I don't think that the amount matters. I don't think that it's going to matter whether it's in June or July or if it's 25 basis points or not. It's the fact that they message that they're starting the cutting cycle and the market will move on that and on that message alone. Let's go back to where we started talking about momentum, but this time rather than for the rally for the actual momentum trade. Bank of America securities, their flows. People keep buying comm services and tech. Yes, they do. Tech saw its fourth week of inflows after outflows most

weeks in 24th, right? So money's coming back in. Comm services, the longest buying streak of any sector, that's 21 straight weeks. So, you know, people aren't willing to give up on this trade, which some, you know, continue to try and declare dead, tired or whatever. Yeah. The enthusiasm runs rampant. And I think there's still so much buying appetite and so much risk appetite that anytime there is a pullback, and obviously the tech trade had seen some softness coming into this year, especially compared to what happened last year. So people saw it as an opportunity. And I think that speaks a lot to investor sentiment right now, wanting the market to continue marching forward and being okay with the idea that it's not going to do it

at as fast of a clip as it had been before. Yeah, I mean, I'm looking at sectors and over at least this month, it's certainly evened out. Tech's dropped back in the pack. It's like sixth. But things like energy, which are the best. Utilities have done well.

Financials, you know, tech is in a slouch, but materials have done well. So it's broadening out. In fact, let's broaden out our conversation. Let's bring in Courtney Garcia of Payne Capital Management here at Post Nine, a CNBC contributor, too. Welcome. It's good to see you again. What's your view? Are we losing momentum as a rally or are we just good? We're just, you know, rest and refresh. I really do firmly believe that the markets are going to continue this momentum higher for a couple of reasons. But the biggest reason is the Fed has gone ahead and indicated that they're likely, at the end of their hiking cycle, they're going to be cutting, which, to your point, we don't know when it's going to happen or how much,

but it is on the downwards direction. And you're starting to finally see cash come off the sidelines. This is one of the first weeks we actually saw that huge $6 billion in cash actually finally went down. What you're seeing is people, unfortunately, are trying to chase the rally. They don't want to miss out on this. They're taking that money and they're putting it into tech. So while I do think the tech trade probably is on borrowed time, people are going to continue to put money there, probably at least in the short term.

So it's not necessarily where I am allocating money for the time being, but I do think general market, you're probably going to see that continue. You're just, you know, simplify the whole thing. Don't fight the Fed. That's basically what it sounds like, right? Powell was dovish last week at Fed Day. The dots didn't change for three cuts coming this year. And at the end of the day, that overshadows and outpowers, overpowers everything else. Yeah, which is almost, it's interesting to me that they were so dovish. Like, I really don't disagree with anything they said. We have a strong economy. We have a strong labor market. Inflation is moderating. Like, really, they should be cutting

later this year. But they're kind of showing their hand early, you know, which is now indicating that the markets are going to price that in, regardless of it happening or not. And the markets do tend to overshoot these things. So, yes, you kind of do have to follow what the Fed is saying, at least in the short term. But inevitably, it could affect them cutting later because they could inevitably be having additional growth in the economy just by indicating they're probably going to be cutting later. Have you ladies respond to Goldman's chief equity strategist, Koston, David Koston, this morning on SOTS. He said the market is flat from here to the end of the year, 5,200. That's the target. That is expectation. You have modest growth in earnings,

8 percent looking into this year, 5 or 6% into 2025. That's the trajectory of profits. Is that good enough? 8% this year, 5% to 6% next year, Liz? Well, I mean, that would be an average-ish year. I think that should be good enough. Rarely do we actually hit average on the nose in returns. I'm guessing, I don't want to put words in his mouth, but I'm guessing that he doesn't think nothing happens between now and the end of the year.

The path to that point might be a little bit more bumpy than what that would suggest. Yeah, he's already had to raise his target on the S&P a couple of times. Everybody has, right? Yesterday, we got a couple more bumps from firms, 5,400, 5,200. I mean, the S&P right now is at 5,228. So you can see why the chase is progressing. Right. But I would imagine that the path to get to that place is going 52.28. So you can see why the chase is progressing. Right. But I would imagine that the

path to get to that place is going to be bumpy. I don't think that we're going to have a VIX that stays under 13 for the entirety of the year, especially if we do approach a cutting cycle. And depending on what the data looks like as we approach that cutting cycle, because it'll start to be interpreted in a way that, oh, now maybe they're cutting because things are cooling too much. The other thing about some of the sector behavior that's going on right now, you're seeing life out of some of the defensive sectors, utilities, staples, right? And you haven't seen that for a while. I think right now that trade is about dividends. I don't think it's about fear. But as the year progresses... Dividends preparing for the fact that... Sorry, I'll come back to you in a sec. Preparing for the

fact that yields are going to continue to go down because the cutting expectations go up. So therefore, you reach for yield and you want utilities. Correct. Yes. But they're defensive sectors by nature. I think the interpretation might get kind of mixed for a little while that if defensive sectors are catching a bid, it's because something is going wrong or the market is sniffing it out. I think the market is trying to get ahead of short-term yields coming down as cutting approaches more quickly. Court, when we were talking about tech, you said, I think, the words were, it's not where I'm allocating capital right now.

So where are you? What looks the best? Yeah, and we've been doing that all year. We, I mean, don't misinterpret it. We own technology. It's definitely a part of our portfolio, and it's been our best performer over the last year and so far this year but we've been making sure that with new cash we've been out of things like small caps things like energy I mean energy has been a really good trade this year and it's not that we have this gifted insight to the valuation trade I mean things were a lot

cheaper you're gonna see things brought now which is what we've been seeing and what we're probably going to continue to see is if tech does continue to do so well it's gonna get to a point you actually need to take some profits from there and add to other sectors with With new cash, I mean, just at the current valuations, it's just not the best place to put your money right now. Energy best of the month, by the way, right? As I just read to you, an anomaly, does that continue? What do you think? I think if economic data continues to be strong and people are optimistic about a cyclical recovery, I absolutely think that continues. And it would be a rotation from 2023 for 2024.

And energy, as we know, was a big laggard in 2023. So if we're looking at some of the manufacturing rebound and some of that activity that had been slowing that we were worried about turning too far in the other direction, energy continues to catch a bit. Industrials, if we think that there's going to be government investment, materials, commodities, all of's going to be government investment. Materials, commodities, all of that sort of cyclical investment.

You didn't say financials. I was going to ask you about that because, you know, it's a double-digit percentage gainer so far this year. Courtney, what do you think about the financials as there was a positive note today from Morgan Stanley's Katie Huberty said these are primed. Money-centered banks, that capital markets are returning. Is this the time? Yeah. And actually, that that is an area that we have been continuing to add to this year, our financials. And we've definitely been looking more at some of the larger money center banks as opposed to some of the regionals, which I think are going to see some more shorter term volatility here.

But absolutely, you want to be able to play those, especially as a dividend play, to your point. Right. I mean, we're not going to get that kind of money. We are in money markets any longer. You're going to need to get some cash flow in your portfolio, and banks can be a good source for that. Liz, financials? I think you have to be choosy. I don't think that we're out of the woods on the regional bank and unrealized losses issue. I don't think we're out of the woods on commercial real estate. The good news is we know about those risks, so they're not going to come out of nowhere and surprise us with something. Big banks. Let's go big.

Big banks, I think the resurgence of capital markets activity is a good thing, and I think they're in a strong position. I don't see a ton of a rally from here in big banks because of something that would happen. Because I think that the rally, if it continues to rotate, is based more on activity, tangible activity in the economy. So things like industrials, which have rallied quite a bit, and materials. And if inflation stays higher, it's because of demand rather than a lack of supply. What about valuations, though? That drives some of the other sectors. Right?

Aren't the valuations of banks so much more, some would say, attractive than, you know, you're going to take a flyer now on tech or some of these chip stocks where the valuations have expanded and sort of leaving, you know, valuations of these lesser performing sectors in the dust? Yes, the valuations are more attractive, but I don't think that that's the place that people are going to be clamoring over themselves for growth opportunity. So comparing it to tech, I think if you're looking in tech and you still want tech growth, you're going to continue to see money flow into things like software or old tech and out of some of the stuff that is very obviously a crowded trade. But the growth opportunity now, I think, is still in health care and even parts of small cap health care and in some of those

cyclical areas that would benefit from inflation staying high. Cor, leave us with a thought about PCE Friday. Markets closed for Good Friday, in some of those cyclical areas that would benefit from inflation staying high. Court, leave us with a thought about PCE Friday. Markets closed for Good Friday. So Monday is going to be interesting around here. One way or the other, right? What do you think? What are you thinking about?

Yeah, and I think this is really going to be the big key this week. I mean, we're not going to have a lot of exciting data up until Friday. And of course, the markets are closed. So you're really going to see things get up or down on Monday, depending on what that reaction is. We are hopeful that we're going to continue to see numbers that are showing that inflation is moderating, which is supportive of the Fed likely lowering rates sometime next year. But again, they're going to be data dependent. So we really have to see how those numbers come out. TBD, we will see you soon. Both of you, Courtney, thank you, Liz Young, to you as well. Back here post nine. All right. Apple announcing

the date for its annual Worldwide Developers Conference. Could this be the company's big AI moment? Steve Kovac is here with those details. And I suppose it better be. Yeah, it better be exactly. And let's get the date out first. June 10th. That's when WWDC is going to happen. And now this is the event where Apple typically introduces the latest software for its gadgets like the iPhone, iPad or Mac, sometimes even new hardware like the Vision Pro that debuted last year. You were there with me, Scott, when that happened. But this year is going to be even more important because we're expecting this to be when Apple makes that AI announcement it's been teasing for the last several weeks. Let's give you some evidence here. Look at this tweet from Greg Joswiak. He's Apple's

marketing boss, teasing a, quote, absolutely incredible WWDC. He did the Trump thing and capitalized some random words. A and I capitalized there. You can figure out what he means. Apple's put enormous pressure on itself, though, to, as CEO Tim Cook has put it, quote, break new ground in artificial intelligence. Now, the company doesn't have a clear AI narrative quite yet, instead pointing to past products and recently renaming them as artificial intelligence.

Last week, we learned Apple is also in talks with companies like Google and China's Baidu to use their AI, at least in part, for whatever new AI features Apple plans to reveal. And we may learn the extent of those relationships at WWDC. And of course, like you hinted, Scott, lots hinging on that announcement. Bullish analysts out there believe this will be the event that starts the turnaround for Apple's tough year so far. Apple has high expectations to meet, and it's set some of them itself. Meantime, Apple's down about 11 percent on the year and, of course, lost that top market cap spot to Microsoft, Scott. Well, they want to be talking more about the letters A-I and not so much D so much DOJ, right? They need to steal the narrative back.

Or DMA. All these headwinds they're facing in Europe, there is that challenge to their adherence to the Digital Markets Act in Europe that we got yesterday. That could force them to make more changes to their services business over there and, you know, open it up to more competitors. So, yeah, there's there's a lot going on that can distract them. But this is going to be the AI event, it sounds like. Yeah. You know, we're wrapping up the quarter. I'd be remiss if I didn't ask you just your thoughts about what the stock has done as really a sore thumb in the mega cap trade. You know, it's down eleven and a half percent on the quarter. It's just not that often that we're sitting here talking about

this stock as such a dramatic underperformer, are we? Yeah. And relative to its peers, it's been the leader. Keep in mind, Scott, it started this year as the most valuable company in the world. It gave that up to Microsoft. The gap between those two companies just keeps getting wider and wider. And part of it is just, you know, smartphone demand and the problems in China with demand just plummeting there, not to mention the resurgence of Huawei, renewed competition there. And then, of course, like I keep saying, the question around AI, what does that look like? And then if we extend it out even further, the next iPhone, what can they put in that next iPhone that is unique to it, some kind of AI special feature that's going to cause people to want to upgrade maybe before they would normally be ready. So those are all lingering questions, you know, hanging on as we get to WWDC, Scott. It's going to be exciting. Appreciate you, Steve Kovach. Thank you very much.

Let's send it now to Pippa Stevens for a look at the biggest names moving into the close. Pippa. Hey, Scott. Shares of Trump Media and Technology Group, the company behind Donald Trump's Truth Social platform, surging today in their debut on the Nasdaq. The stock, which is trading under the ticker DJT, jumped as much as 50 percent earlier in the session. The former president owns at least 58 percent of that company. And a rollercoaster ride for shares of International Paper, hitting a 52-week high before turning negative after D.S. Smith confirmed it's in talks to be taken over by international paper in an all-share deal. The move could start a bidding war after Mondi submitted an offer earlier this month. That stock now in the red today. Scott? Yeah, but Stevens, thank you very much. We're just getting started here on the bell coming up.

What's next for this record rally? Top technician Jason Hunter is back with us and why he says he's suspicious of the momentum, plus the sectors he thinks will see some serious strength ahead. That is right after this break. We're live from the New York Stock Exchange and you're watching Closing Bell on CNBC. Welcome back. Stocks in the green across the board. The S&P tries to rebound from back-to-back losses, and my next guest calls the rally broadening suspicious. Says now's the time to sell the breakdown in crowded momentum groups. Let's bring in J.P. Morgan's Jason Hunter.

Welcome back. It's good to see you. Thank you very much. Great to be back. Let's start with how the rally looks to you overall. As we're about to close the quarter, we're on a five-month winning streak for stocks. How do we look? It started out as a very thin rally and mostly the big mega cap tech names that led the way.

Those have paused for the better part of the last couple of weeks. What's taken the leadership in a way has been the deep cyclical. So industrials, materials, energy and financials. And that coincided with a sharp lift in commodity prices, industrial metals and the energy sector as well. Like we put in our note that we just published this morning, that seems suspicious in terms of the timing. If you look at the shape of the Treasury curve, you're able to do analysis and comparative analysis of the U.S. manufacturing cycle, you know, going back to the early 1960s

and the shape of the, let's say, three-month, five-year curve. And with that curve more than 100 basis points inverted, history suggests it's going to be very hard for a manufacturing cycle, you know, or a substantial one anyway, to play out from here, which is really what those deep cyclicals need to continue to rally from here. So, you know, like I said, you know, the broadening of the rally from a pure technical perspective, if you're looking at market breadth, that's what the bulls want to see. But we're not quite sure, you know, we believe what's going on here with the rotation. I mean, those who've tried to make calls based on history have had their calls run over by a herd of bulls throughout this whole period, it feels like. Well, history suggests when the Fed does this, the economy does that. History says when you have one big group leading for some time, it's unsustainable, the market rolls over.

None of it's happened. Yeah, I mean, you could put us in that camp as well. When you think about the long and variable lags of an inverted yield curve and the transmission mechanism to when that finally starts to get priced into equities and equities start to think about risks going forward for the broader economy. You know, we ourselves in the technical group here at J.P. Morgan thought that that would have happened sooner. And the reality is from ever since the S&P pushed above the 4,400 level, we've been skeptical. And here we are, you know, poking at the 5,200 and above area. You know,

it's the long and variable lag period. The economy has a little bit of hang time here over the last few quarters. And, you know, we've paid the price for that when doing the comparative analysis. But again, you know, if you look at even in the post-1980 world, when the lags were longer and far more variable than what you saw in the pre-1980 cycles, 22 months after the three-month, five-year curve inverts, that's typically on average when you've seen the data finally start to inflect lower in the economic data. That would put us roughly in August of this year. And markets, in theory, should lead that by, you know, one to two quarters. You know, so can it stretch longer than that? Sure. That's what, you know, what we

basically have done is say, look, the momentum's strong, you know, stop trying to fight the trend, go to a neutral stance. And right now we've kind of this two-pronged approach. If the leadership, the heavy momentum names start to break down and, you know, coincidentally, the 50 day moving average sits at that those pattern support levels. So it's a nice, easy number to look at for something like the Nasdaq, S&P 500 or the Philadelphia Semiconductor Dex. If those break to the downside, you follow that and you go short and put a tight stop. And on the flip side, if something like the Russell is going to start to break out, small caps are usually the last to go in a PMI cycle or in a manufacturing cycle. There's a lot of catch up there. While we're skeptical of that, we would just follow suit. And let's say if the Russell breaks above 2150, you start stopping into exposure on the long side and put a stop under that. Again, that's our risk scenario.

We find it hard to believe that unfolds. But as a technician, if it starts to break out, you know, go long and try to stop underneath it and see what happens. Yeah, no, I sincerely appreciate your contrition on all that. I think a lot of technicians have been caught under a steamroller to this rally. It's been confounding to some. You mentioned the momentum in the mega caps stalling or looking like it's, you know, fading. Pausing is not necessarily a bad thing for a trade that was virtually straight up, no? Yeah, that's right. And that's like normally when we see this type of deceleration in a trend, particularly with the yield curve that's inverted, that's that's, you know, usually a time where we get aggressive and say,

OK, go short, don't wait for the breakdown, get ahead of it and don't give up that three to five percent. But because the momentum has been so powerful since the October lows and we've seen this deceleration and reacceleration without breaking support for, let's say, at least three times since early December, we want to wait for the breakdown at this point or a broader distribution pattern to form. Neither of those are on the cards right now. So at this point, you respect the momentum and kind of stand aside and wait for the market to do something wrong

before you try and go after it from a bearish perspective. Yeah, I mean, from a historical perspective, I know we sort of threw a little cold water on looking at history and trying to determine trends because this market's just different. But April is traditionally a good month for stocks. I cited all the stats at the beginning of our program about how traditionally well this month is for the bulls. Yeah, I mean, you know, you can look at those seasonal patterns. You know, the main problem that I have with those types of things, the error is usually a multiple of the forecast. So it's really hard to go along with those sorts of things, particularly after the size of the rally that you've had here. Like I said, we're not bullish

by any means. We'd only buy a breakout and small cap. But yeah, the seasonal patterns are what they are. And as you referenced, April is usually to the upside. So you'd buy the breakout and small caps. I mean, there's been fits and starts, and it's been hard for, you know, a whole mass of people to get behind that trade. Some suggest, well, you've got to wait until the Fed actually starts cutting. But if you do see a breakout, you'd be a believer. Yeah, and I think there's two reasons there. Like, number one, you know, if there's a PMI cycle,

the last time you've had small caps underperform to the extent they have, and the PMI data has lagged some of the leading markets like semiconductors or European autos. That was 2012 after the euro sovereign crisis and the U.S. debt situation. Small caps had a multi-quarter period of tremendous outperformance as the PMI data and manufacturing data actually started to print well. Like I said, I think that's a low probability outcome. But on the flip side of that, along with the bullish mega cap momentum trade, if you look at the long short community, you know, that in part has gone hand in hand with underweights and shorts in small cap, high beta, low quality. And Dubrovko, Lekos and our team here, they published a fairly sizable

piece on this a couple of weeks ago, where you have so much, you know, crowding into into that that trade structure that you could get something of a momentum crash in either good news or bad news where large cap underperforms and small caps outperform in a sizable way. Jason, we'll talk to you soon. I appreciate your time very much. Thank you, Jason. Thank you, JPM, as you see coming up, trading the tech strength. Peter Malouk from the top rated firm Creative Planning is here with his forecast for the sector. And the one mega cap names, the one mega cap name, name singular, he thinks could have some issues ahead. And a quick programming note tomorrow on Halftime. Speaking of tech, a CNBC Halftime exclusive.

Altimeter Capitals, Brad Gerstner, all things tech plus big news on his Invest America initiative as some of this country's best known CEOs have joined his council. Don't want to miss that. Closing bell is coming right back. Welcome back. Tech is one of the top performing sectors this quarter, with the space hitting a record intraday high again today. And while our next guest is bullish on tailwinds from AI, he does see some potential issues ahead for one of the group's leadership names. Joining us now, Peter Malouk, the president and CEO of Creative Planning. It's good to see you. Welcome to Closing Bell. Hey, it's great to be with you. So obviously jumps out to me first on the list of the things you say you don't like within tech, NVIDIA is on the list? What? Look, tech's got a long way to go. A lot of people, clients ask us, well, how long is this tech rally going to continue? And I tell them, for the rest of your life. I mean, that's, we're in

the middle of a revolution and we're in the middle of an AI revolution and chip makers are going to do well for decades. But with NVIDIA, and I don't know when it's going to pause, but it is going to pause. And what is different about NVIDIA is I would not equate it to Apple. As a company that has a significant moat that's going to protect it for all time, I would put it in the same boat I put a company like Netflix or Tesla, which is just an incredible company. It's an innovative company. It's an

innovative company who knows how much longer it has to run, but it doesn't have a moat. It has a head start. And those are very, very different things. And companies with a head start, the market eventually catches up with them. Yes, the revolution can continue, but that does not mean all the eggs should be in the NVIDIA basket. But if you have the best and most powerful component that seemingly almost, and I'm putting this in quotes, everyone needs, that has to be a bit of a moat, especially if you incorporate the Head Start, you suggest, the amount of money they're able to charge for the transformative chips that they have. It has to be a little bit of a moat somewhere, no? I mean, come on. I would say everything you said is correct, and I would add the words, for now, to the end of it. Yeah, everyone needs it. There's not a lot of alternatives.

The competitors are going to get started. You've got the AMDs of the world, Intel's of the world, but you're also going to have these other players like Oracle that are coming. There's going to be all kinds of companies that are going to come into this space. They are going to be successful. They're going to figure it out, and they are eventually going to catch up. And when we see that, this sales to earnings ratio is going to come back down to earth. That might be a couple years, it might be a couple months. I'm not big on timing the short run. The space is for real, this company is for real. But at some point, people are going to regret if they've got all their eggs in one basket. I'm all for having it as part of an index or having a significant position as part of your portfolio as a bet on this space.

But, look, I've seen a lot of people that have come to us. This is 20%, 50%, 60% of their portfolio. They think it's the new Apple. It's not the new Apple. It's a leader in its space. It's innovative. It's an incredible company. But Apple does not have competitors that are real competitors that really threaten its business enterprise.

NVIDIA has real competitors. They're going to catch up in a few years. We're going to see a lot of them emerge and be successful. Do you guys own the stock? We do because the largest part of most of our clients' portfolios is index-based. It's one of the largest performing positions for our clients that have that large cap position that most of our clients do. They've reaped a lot of reward from NVIDIA. We've seen these big tech stocks lift up, for example, the S&P 500 year over year over year, where everyone says, well, the S&P 500 is terrible except for Apple, or the S&P 500 is terrible except for Facebook, and this year it's terrible except for NVIDIA and a couple other names. Well, that's the point of owning a diversified basket of large stocks. About 30%, 40% of it's going to be technology, and these winners,

a loser can only go down 100%, a winner can go up 1,000%. That's kind of the whole point of taking that approach. You don't have too many eggs in one basket, but you're still having you're still participating in the upside when these runaway companies happen. One of the eggs in the basket that looks to have cracked of late is Apple, since you've mentioned it comparatively to Nvidia. But you do like that stock here. Tell me why. Well, I love Apple and I love it all of the time. And I think it's because if you if you went to the average American that has an iPhone and says for the rest of your life, I'm going to take your iPhone away or one of your fingers, the majority of them are going to say, here's my hand. Go ahead and take a finger. This company has a real moat. There is no real competitive threat to Apple. The only risk Apple

faces that I think is serious is regulatory risk. But even that is going to be muted to some degree. So it's going to have its headwinds like it's facing now. But if you told me I had to own Nvidia or Apple and wake up 20 years from now, which one will have done better? I'm going to take Apple. We'll leave it at that. Stocks at 170. And some people think it may go lower than that.

We'll see. Peter, it's good to have you on the program. We'll talk to you soon. Peter Malouf, joining us here on Closing Bell. Up next, we're tracking the biggest movers as we head into the close. Pippa Stevens is back with that. Pippa. Hey, Scott, an experimental pill could tip the scales for one weight loss drug manufacturer.

We've got the details coming up next. just shy of 15 minutes to go before the closing bell let Let's get back to Pippa Stevens for a look at the key stocks she's watching. Pippa. Hey, Scott. Viking Therapeutics is surging after the company's experimental weight loss pill showed positive results in a small study, and it will enter the next stage of development later this year. The stock more than quadrupling year-to-date amid momentum behind the weight loss market. And McCormick jumping after the SpiceMaker beat top and bottom line estimates for the first quarter.

CEO Brendan Foley saying on the call the budgets are stretched and higher inflation in the food service channel means consumers are eating at home more, which is helping the company's bottom line, that stock up 10 percent. Scott? All right, Pippa, thank you very much. Still ahead, shares of UPS are sinking today. We're going to break down what's sending that name lower and bring you comments from the company's CEO. Closing bell, we'll be right back. Gender gaps in the venture capital industry are still massive. In the U.S., women comprise about 11% of investing partners. And last year, female founders secured just 2% of all venture capital dollars, while co-ed founding teams secured 21%. So over three quarters of all VC dollars go to male-only founding teams.

For Women's History Month, I'm Julia Boorstin. I want to show you shares of Reddit once again, popping yet again today, more than 40 percent this week alone. But one firm is negative on that name, saying it could fall nearly 10 percent from here. For more, head to CNBC.com slash ProPIC or scan that QR code on your screen for more information on that call. Up next, your GameStop setup. That stock is at a rough run, falling nearly 40% over the past year. So is a turnaround in the cards. And do not miss an exclusive interview with the chairman and CEO of Adobe. That's coming up at 4 p.m. Eastern in overtime.

Closing bell. We'll be right back. We're now in the Closing Bell Market Zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day. Plus, UPS heading for its worst day in three months. Frank Holland has those details. And Steve Kovach looking ahead to GameStop results out in overtime. First to our senior markets commentator sitting next to me. What's on your mind today?

Well, it's hard to draw any significant objections to the way this market is acting. It's just kind of low volume, low volatility drift at the end of a quarter, sitting less than 1% from the all-time highs, kind of sealing the books on a very strong start to the year. That being said, I have a hard time not looking for what can possibly be standing out as less than strong. One thing is, this is the fourth kind of exhausted sagging close in a row. Maybe that's just the sort of rebalancing out of stocks into bonds that happens in the absence of other macro effects. And it's also tough, I just find personally it tough to just stick with a market

where your main advantage is not overthinking it. Your main advantage is let the market just keep kind of grinding on the same positive news flow and macro backdrop. I find it more comfortable when it's climbing a steep wall of worry. There isn't really a steep wall of worry anymore. A few months ago, you could say everybody thinks the MAG-7 is everything. And everybody thinks if two of those stocks fall apart, we're in trouble. And I was able to say, no, I don't think so. You know, it could be more nuanced than that. And similarly with the Fed rate cuts.

Now everyone is on board with it's okay if we don't get rate cuts soon. So I'm just in that mode of seeing, like, give your respect to the trend. There's nothing that's remotely close to breaking the uptrend. But be aware that this is when unexpected stuff happens. I mean, the overthinkers have been run over. No, that's to a large degree. I'm talking more like in the last few weeks. Yeah. You know what I mean? When it started to seem like this complete lack of a 2 percent pullback in five months starts to get extreme. Well, let's see what happens with the PCE. Now, I know we're not going to trade it on Friday, but Monday is going to be interesting. I'm willing to completely concede there's definitely upside risk to the PCE, too. I mean, if that's really tame and all of a sudden it looks like Powell nailed it by just sort of not budging on the three rate

cuts and all the rest, then, you know, there's one less perceived impediment gone. Yeah. Keep watching the mega caps, too. I mean, that trade, you know, there was a moment today where many of the mega caps were in the green. And now we're in a scenario where many now are in the red. Tesla's come off its high, too, as we're... It's because all the energy is in, like in the small, fast-moving, exciting,

speculative stuff today. So maybe that's taken some strength away from NVIDIA. All right. Not so special delivery today, Frank Holland, for UPS. What's driving this stock sharply lower? Well, Scott, this UPS stock decline today, it kind of came in two waves after it opened fractionally higher. The first, when UPS said in its own presentation that the parcel shipping market here in the U.S. currently has the spare capacity of 12 million packages per day, raising a few eyebrows about UPS's ability to hold pricing and grow margins. And then second, where the company said the Q1 EBIT would come in lower than the first half estimate. It also lead to some questions about exactly how the company is going

to achieve targets, not only long-term, but in the short term, leading to levels that we're seeing right now on Pacefort's worst day since earnings. UPS CEO Carol Tomei appeared on CNBC earlier today discussing the current demand environment. We did see volume leave us during the contract negotiation and more than we expected, candidly. But I'm happy to report that we have brought 60 percent of that volume that diverted back into our network. And it's not just about winning back. It's also about winning new. We do believe that volume will be down in the first half of this year, but we expect it to return to growth in the back half of the year.

So I spoke with a number of analysts. They found the targets that UPS put out to be quote-unquote aspirational. Others saying the outlook seemed to depend on a Goldilocks scenario, not only for UPS, but for the entire U.S. economy. B of A analyst Ken Hexter out with a note earlier that really captures some of the skepticism, saying in part that the 2026 EPS estimate is 20% higher than their numbers. Also citing UPS missing the targets they laid out at their last investor day. Scott, back over here. Frank, quickly, I mean, why such a discrepancy between the performance of FedEx and UPS? It's not even close. Yeah, I mean, a lot of speculation about that. I know what you're saying. Excuse me, FedEx shares up about 2%. So, right, yeah, FedEx shares about 2% right now. You see where UPS is right now. So, big difference there. I'm talking like month-to-date, year-to-date, quarter-to-date.

It's not even close. Oh, I mean, well, you have to remember, January 30th was when UPS had its last earnings. That's the last time it had a day this bad. I believe they missed volume by about 10%. They were 10% below estimates. A lot of questions about exactly how they're going to work off this Teamsters contract. They said it was kind of a barbell thing. They were going to see the impacts in the beginning. In the middle, they would see some easing of cost pressures and then have to pay some more at the end. But at the same time, they're trying to cut costs. So they're paying more for labor, even though it's in the front end, as they said. And they're also trying to cut costs. They're just kind of missing the mark in the eyes of analysts and obviously investors a bit. I appreciate that. Frank Collins, Steve Kovach watching GameStop. Earnings out in OT. What do

we expect? Yeah, not a lot of visibility into everyone's favorite meme stock here. But what we do know is there's some data from over the holiday quarter that video game console sales have kind of softened a bit. We heard that from Nintendo. We heard that from Sony. So we can see how that impacts sales over at GameStop. But look, this company doesn't give guidance or anything like that. They don't even hold a conference call. So unclear really what to expect beyond just some softening demand in

video games overall. So we'll see what the results happen after the bell. All right. We'll look forward to that. Steve Kovac, thank you very much for the sound effect. Marking the two-minute warning. Yields mostly lower on the day. They've been a pretty tight range here as we wait for Friday. Yeah, that's been a comfortable situation where yields kind of came back off the highs. They've managed to sit around there. Not a lot for them to react to. We mentioned earlier the Philly Fed kind of soft. The economic surprise index has sort of rolled a little bit toward moderation. So really, that's fine.

That's why I think the macro stability is allowing people to do other things, like buy Reddit. You know, I mean, Reddit's like one of the top 12 most active stocks and options on the interactive brokers platform, four days into its history. It's up 40%. And obviously, we got the DJT. So it's sort of the fun part of the market where the stakes are low in terms of real world, but they're high in terms of risk-reward on a short-term basis. That seems to be where some of the energy is falling.

I'm not one to look at people doing the speculative stuff and start to scold and say this means the market's topping. It really doesn't. Usually it's a bull market kind of behaving like a bull market. But it's notable that you're starting to see other names being taken up in that current. You use the word energy to talk about something else, obviously. But I look at energy. It's obviously had a really good month up 8%. It's been the outperformer. we'll see if that trend continues exactly so

there's this sort of reflationary moves going on um in the market in general and also just the mean reversion trade so the market's kind of stable equal weighted tech's underperforming the market this month the money's kind of flowing elsewhere for now. Sometimes you get a little excited on the phone. Yeah, they jump the gun a little bit, yeah. Sometimes they get a little excited. There is the bell, though. We'll go red. I'll see you tomorrow. Into OT with John Fort and Wilford Frost.